How The Massive K-Cup Disaster Could Have Been Avoided

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“Quite honestly, we were wrong. We underestimated the passion the consumer had for this. We missed it. We shouldn’t have taken it away. We’re bringing it back.”

These are Keurig CEO Brian Kelley’s words to market analysts last week, when he admitted it was a mistake to discontinue the “My K-Cup,” thereby preventing consumers from having a wider range of coffee options.

Unfortunately the coffee machine manufacturer learned its lesson the hard way by not listening to the Voice of the Customer. Sales of Keurig machines and accessories dropped by 23 percent last quarter, resulting in a 10 percent fall in stock price. Now that the company has announced its plans to begin selling the product again, it still might be too late to win back a significant portion of their customer base.

This crisis could have been easily averted if Keurig had conducted a sentiment analysis on customer feedback. Data from social media, surveys, review sites, inbound emails, the call center and many other sources would have likely produced a spike in negative sentiment about the discontinuation of the My K-Cup product. Armed with these insights, the Keurig product team would have been able to address the issue sooner, resulting in a less severe loss of sales. Better yet, an early sentiment analysis would have likely revealed a positive sentiment about the My K-Cup product, and Keurig would not have decided to discontinue it. In this scenario, the situation would have been avoided entirely.

This implications of this blunder extend far beyond a quarter’s revenue loss and sinking stock price. The brand’s reputation is now damaged, as consumers see the discontinuation of the My K-Cup product as a way of forcing them to buy the more expensive alternative. When Keurig’s Facebook page exploded with negative comments, the company explained that using the My K-Cup with the new brewing technology represented a “safety concern” for consumers. Of course this explanation was not well-received and the brand damage seems irreversible at this point.

One of our clients in the small appliance manufacturing industry listens to customer feedback across a variety of channels (particularly social media) to inform product decisions. They even use this data to help determine what products to acquire. About 18 months ago, this business was strongly considering purchasing a seemingly popular and very trendy kitchen appliance. But after conducting a sentiment analysis with the Clarabridge platform, the company decided against making the purchase, as customer sentiment for that item was declining. Potential disaster averted.

We all cringe when we see a massive customer experience gaffe like Keurig’s and hope it never happens within our organization. But by always listening carefully to all sources of customer feedback, we can greatly reduce the risk of an un-informed product decision, and drink our morning coffee more peacefully.

4 COMMENTS

  1. Agreed. This is merely the latest in a long line of public miscues resulting from either a lack of transparency with customers or failure to solicit their perspectives as product and services decisions are being made. They can now join ranks with companies like Intuit’s QuickBooks (undisclosed fees for tax software add-ons, previously offered at no cost), Netflix (undisclosed price hikes and the attempt to mask changes with Qwikster), and Bank of America (undisclosed new ATM and checking account fees), all of which generated massive negative PR and had to apologize to customers and offer give-backs..

  2. Hi Michael. I agree that transparency is critical. Consumers are smart, and they’ll figure things out, so it’s always best to be upfront. Great examples of similar situations!

  3. Hi Elizabeth: it seems right that Kuerig should have performed sentiment analysis or abided by readily-available customer feedback. Often, there’s too little oxygen in the executive suite when it comes to decision-making on these things. The recent Bud Light beer slogan debacle comes to mind.

    But when it comes to consumer transparency, I’m challenged to use the words ‘simply’ and ‘easily,’ because not every decision to be more transparent is straightforward – or risk-free. StubHub and General Mills are just two companies that took a deliberate position of being more transparent with consumers, yet they took revenue hits for their fortitude (see ‘A Contrarian View on Transparency’).

    I agree that better decisions are made when executives avail themselves of consumer opinions, sentiment, and information. But more transparency also has a price.

  4. Andrew, that’s an interesting perspective, and it probably has a lot to do with the market and expectations within the industry. Keurig had set an expectation that consumers could use any brand of coffee they wanted with their machines, and then they removed that “freedom” without being transparent.

    I’ll check out the Contrarian View on Transparency article.

    Thanks for the comment.

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